Standard & Poor's, the world's leading index provider, announced today the latest results for the Standard & Poor's Indices Versus Active Funds Scorecard (SPIVA) for Canada. For the second quarter of 2008, only 31.2% of Canadian equity active fund managers outperformed the S&P/TSX Composite Index. Active managers in the Small/Mid Cap Equity category fared better with 57.7% beating the S&P/TSX Completion Index. Similarly, in the Canadian Focused Equity category 51.7% of active funds outperformed the blended benchmark of 50% S&P/TSX Composite + 25% S&P 500 + 25% S&P/Citigroup EPAC PMI.
"This latest SPIVA results highlight the volatility of shorter-term outperformance for active funds," says Jasmit Bhandal, director at Standard & Poor's. "When compared to Q1 2008, some active funds fared better than their respective benchmark during the second quarter; however, a review of performance over the long-term indicates that a majority of active funds continue to underperform their respective benchmarks." SPIVA reports the performance of actively managed Canadian mutual funds corrected for survivorship bias, and shows equal- and asset-weighted peer averages.
SPIVA results for the second quarter of 2008 showed mixed results in mutual funds investing outside of Canada. 51.2% of active U.S. Equity funds outperformed the S&P 500, only 31.8% of International Equity funds outperformed the S&P/Citigroup EPAC PMI Index and 55.9% of Global Equity funds outperformed the S&P/Citigroup World PMI Index.
The majority of active funds underperformed their respective S&P benchmark over one, three- and five-year periods. Only 15.2%, 11.6% and 6% respectively, of active Canadian Equity funds were able to outperform the S&P/TSX Composite Index over these periods respectively. For active funds in the Canadian Focused Equity category 47.8%, 41.7% and 49.4% of funds outpaced the blended S&P/TSX Composite benchmark index over the one, three- and five-year periods respectively.
Survivorship
SPIVA reports also include a survivorship bias correction to account for funds that may have merged or been liquidated during the period under study. Survivorship over the past five-years is 39.7% for Canadian equity, 42% for U.S. equity, 60.3% for international equity, and 41.5% for global equity. In other words, a significant percentage of the funds in these four categories has been merged or liquidated over the past five years.
